SWM - Mark Moore

The table below shows the liability portion of Schweitzer-Mauduit’s balance sheet. Lineitems are designated with the proper interest rates next to them to get the weighted averagecost of debt. Interest rates were derived from a few credible sources such as Schweitzer-Mauduit’s 2008 10K, the St. Louis Federal Reserve, and yahoo! Finance for bond rates. Forcurrent debt, long-term debt, and other liabilities we use the weighted average cost of longtermdebt found on SWM’s 10-K. Accounts payable and accrued expenses interest rates werederived from the St. Louis Federal Reserve non-financial three month commercial paper rate.Current deferred revenue and long-term deferred revenue rates came from the yahoo! Financetwo-year bond rate. This rate has opportunity costs associated with it which makes for acredible rate to use for these line times. We used the defined pension plan rate for pension andpost retirement benefits. Lastly, the St. Louis Federal Reserve 10-year risk-free Treasury billrate was used for deferred income tax liabilities.Now that interest rates are delegated to their respected liabilities we can calculate theweighted average cost of debt. The first step in the calculation is to divide individual liabilitiesby total liabilities to get your weights. Next, multiply your weights by the designated interestrates. Lastly, add up all the weighted averages to get your total weighted average cost of debt.After calculating the WACD for Schweitzer-Mauduit, we found its weighted average cost of debtto be 3.57%.153